I don't know what David wrote about it, but I wouldn't put all my files in one folder. That would mean hundreds or thousands of files in one folder, which is unworkable for me. If you know the exact filename you are looking for, you can let the system search for that. That means you have to type in the filename, which costs time. Or you scroll down to that file, which also costs time. With so many files, you would probably have a lot of files with similar names.
Then there is the problem of files with the same name. Readme.txt or index.html are likely to be in your system more than once, which is impossible in one large folder.
So I would recommend putting your files in many different (sub)folders. There is a trade-off here: more searching by using a lot of subfolders per folder versus more clicking by using few subfolders per folder, which results in deep directory structures.

How do I do it on my home computer? All my documents (text, pictures, etc) go to the D: drive in Windows. Occasionally I work with Linux. I have a /doc folder in my home folder which serves the same purpose. Let's assume Windows here.
The main folders there are:
\archive (mostly downloaded programs)
\My Music (mp3's)
\My Pictures (obvious)
\study (I study, so all study related files go here. For other people that would be the \work folder)
\system (a few system files are backed up here, like the register and the contents of the c:\ folder, for a bit of extra security)
\temp (for temporary storage of files that I don't know where to put just now or that I will delete shortly after. I like to keep my main folder d:\ clean; that's where d:\temp comes in handy)
\var (various files)
\video (just two short videos here)

Per folder I would say: have at most twenty files OR subfolders, else you loose overview. Each folder listing should be viewable on screen on one page, without scrolling.
In my case, the var and study folders have many subfolders. I'll end with a short description of my study folder.
Every class I follow, gets its own folder. My schoolyear is divided into four quarters. Classes from earlier quarters go into subfolders within \quarter1 etc. When a year is finished all quarters go into a \year folder.
Actually, I removed the first two years now, as I don't need them anymore. I did make a backup on CD.

Comment

In there, I have 10 sub-folders...all of which are pretty general. (ie: one is called "The David Allen Company.")

Then, inside each folder, are other, related folders. (ie: in "The David Allen Company" folder is another folder for "Getting Things Done Seminars.")

So, I file any scripts, PPT presentations, and examples for the GTD seminars in THAT folder. All I do then is go down a trail of like-items, getting more and more specific until I hit the document I'm looking for.

One of the "success factors" of filing on the computer is the same as filing hard copies. Once in a while (each year?), you must review all those files, folders and documents. Yes, it takes a while, but it keeps the computer from becoming a black hole of "previously important" stuff.

Programs = whatever program are on your system.
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This saves time for file retrieval &amp; saving, it keeps the data away from the programs. It allows for file specific back ups to other media. And most of all.......it works for me!

On my someday/maybe list I will be adding a 2nd hard drive only for data. To allow for the old addage, the amount of computer knowledge you have is directly proportional to the amount of data you lose.